Barnes & Noble.com Starts Imprint

Friday, January 5th 2001, 12:00 am

By: News On 6

NEW YORK (AP) â€” Barnes & Noble.com on Thursday became the first major retailer to start its own electronic publishing division, offering an original work from suspense writer Dean Koontz among its first titles.

Barnes & Noble already publishes many books in paper form and is a major investor in the electronic market. Last September, it purchased the digital provider Fatbrain.com and it also owns a portion of the online vanity press iUniverse.com.

But the creation of Barnes & Noble Digital marks its most ambitious move yet. The new e-book division is expected to focus on established writers such as Koontz, out-of-print books and ``classics'' in the public domain. The price will likely vary between $5.95 and $7.95, much lower than the cost of a typical e-book release from a traditional publisher.

In addition, Barnes & Noble will pay 35 percent royalties on e-books, a major concern for many authors. Among traditional publishers, Random House is believed to pay the highest royalty, 50 percent on net sales. Barnes & Noble will base royalties on the list price, a more generous calculation.

Analysts called the move a credible challenge to print publishers.

``For a couple of years people have been warning traditional publishers they be could cut out of the e-book process,'' said Karen Jenkins Holt, managing editor of the newsletter Book Publishing Report. ``But it didn't seem a strong threat because most self-publishers don't have the marketing clout or editorial expertise. Barnes & Noble.com is in that position.''

``It's a smack in the face to traditional publishers. They should all be worried,'' agreed Stephanie Oda, publisher of the industry newsletter Subtext. ``Certainly, Barnes & Noble intends to a huge player in e-books, if not the biggest player.''

Michael Fragnito, publisher of Barnes & Noble Digital, said traditional publishers shouldn't feel threatened by the new imprint, however, but should simply take better care of their authors.

``I hope publishers realize that e-books are a real market and we are in a unique position to help writers reach readers,'' Fragnito said. ``They should pay authors a fair share and also price e-books at a much lower rate.''

Laurie Brown, vice president of marketing at Farrar, Straus & Giroux, had a mixed reaction. Because the Barnes & Noble e-books won't be available through all retailers, she doesn't think the new imprint offers ``the best opportunity'' for electronic distribution.

At the same time, she observed that ``Barnes & Noble always keeps us on our toes. They're smart and they have a lot of imagination. They look for growth in new areas. If they can combine enthusiasm for the traditional store and the Internet, they're going to be mighty.''

Shares of Barnes & Noble.com rose 34.4 cents to $2.19 in trading on the Nasdaq Stock Market.

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On the Net: http://www.barnesandnobleinc.com